What the Wireless Industry Will Tell the Feds, the Wired.com Interview (Pt. 2)

The FCC decided Thursday to look very closely at the nation’s cellphone market to see if some smart rules might not make mobile-phone data plans cheaper and accelerate the speed at which innovative devices land in the hands of American citizens.

That means federal regulators are going to be asking tough questions of the wireless industry.

Chris Guttman-McCabe will be answering as the voice of the mobile-phone carrier in D.C. In this second part of an interview he gave Wired.com recently, he explains why internet freedom rules should not apply to mobile networks and how the iPhone can’t take all the credit for busting down the barriers to an open wireless internet.

Guttman-McCabe finished Part 1 talking about how carriers are opening up their phones. We begin when he says Skype, the free and low-cost calling service, now runs on 100 phones.

Wired.com: If that’s the case, what’s the problem with adopting the Skype petition to force wireless companies to let customers use whatever services they like and extending the FCC’s broadband principles (known as the “Four Freedoms”) to the wireless network?

Guttman-McCabe: Our handsets are integrated with our networks, so when you are standing still and you look at your phone — at one moment it might have two bars and the next moment it has four. The phone and the network were talking, and phone powered up to pick up a better lock on the signal or maybe it switched to a tower farther away that is less utilized.

This is completely different from the environment that the broadband principles were designed for. There is no additional intelligence in your computer that evolves because you are moving.

In our space, if you have intensive broadband use and [someone else] does too, and I try to make a phone call, you can limit or prevent my phone call. And that is different in that our service offers both simultaneously on the same device, and there is a true expectation in our space that folks are going to be able to make calls when they want to make calls, whether that is a simple call home or something more intense like dialing 911. For us, the spectrum or infrastructure is shared not just across users but also across services.

Wired.com: I get you, but we’ve seen that AT&T and Apple won’t let iPhone users use Slingplayer over its 3G connection, yet it’s fine to use MLB’s video app because they are paying money. So we are seeing decisions that aren’t made on those technical merits being justified by those technical merits.

Guttman-McCabe: I don’t know if they are not technical-related decisions, those are questions best put to Apple and AT&T. But think of going to a website that is optimized for a mobile phone, versus when you visit one that is not optimized. One is bordering on worthless, since you have to scroll all the way down and you have to scroll down three minutes to read an article. So there are issues where products are optimized and they don’t have the same impact.

That environment is evolving and we have fourth-generation networks on the way. We will get better efficiency out of the fourth generation than we got out of the third and we have two bands of spectrum, AWS and 700 about to come online. But I would say there is a tremendous growing crisis in terms of access to spectrum.

I have a person who works with me who uses an iPhone with Google Voice through the browser, and he has a Google G1 phone and it works there, too.

Where is the harm that has occurred? And again it is evolving. We couldn’t have had these debates two years ago, because there wasn’t a 3G network to apply these innovative phones to.

We also talk about this concern about getting spectrum into the pipeline because some of incidents with network management get solved with additional spectrum.

So I look at this and I say if you are going to put in rules that were clearly not designed for this service market, tell me why.

What are the harms you are seeing? When you have over 600 phones, you are going to find just about every application anyone could want embedded on that phone or downloadable on one or many of those phones.

I don’t think prescriptive rules are necessary.

There are mix of consumer and pro-competitive things that carriers do that under per se net neutrality rules could be considered illegal, but he said per se rules are better applied to things such as fixing, where rule-of-reason analysis is something you use to look at an industry when you don’t have a monopoly industry.

If you look at the Carterfone decision (which freed people to attach devices not owned by AT&T to the phone network leading to the development of the fax and internet), the Bell system owned all of the networks and all of the devices. We don’t have a single carrier that has an ownership stake in any of the 33 manufacturers.

So to me it’s a different environment. You would argue, Why not? I would argue Why?

Wired.com: Isn’t some of the explosion in the mobile online usage and the availability of mobile applications because the walled garden approaches that the mobile industry held onto for so long got knocked down by Apple? And isn’t fighting against the broadband principles just an indication that the carriers haven’t learned the lesson that knocking down the walls is good for business?

Guttman-McCabe: I absolutely would say that Apple has a lot to do with the evolution, but the Apple evolution could not have happened without an upgrade in the networks. So it wasn’t just that the walled gardens came down because Apple came along, it’s that they came down since the experience in 3G was so rich compared to 2G.

And, it was not just Apple. It was also the innovators on the app side, finally who aligned with innovators on the device side who aligned with the innovators on the network side. The whole ecosystem has moved significantly in the last two years.

So, yes, the walled gardens came down, but more websites have optimized for mobile devices and there are more applications that allow you to do interesting things. My older Blackberries had a walled garden icon and an unfettered internet icon, and any time I would go to a new site, it was like 20 percent chance at most that a site was optimized, I’m not talking about crazy sites – I’m talking about sites like MSNBC.

Visiting some of these sites on some of the devices was worthless. I would end up going back and going through the walled garden since there were about 100 sites that were optimized.

The content and application guys have evolved, and they recognize that a wave is coming of people using these devices.

I’m not going to disagree with you .The walled gardens have come down and it was part the iPhone and part the network and part innovation on the application and content side.

I think it is a good thing you have 32 other manufacturers chasing them and a number of application stores chasing them, I think that is a good thing.

We are seeing a continuing explosion of devices and integration with them. We have a lot more to come.

Everyone has to get government focused on getting spectrum out to the market. Here is an industry that is doing well financially, that is paying salaries and dividends, and investing north of $20 billion back in and is willing to spend tens of billions more on spectrum. We just need help. We just need someone to get it out there so we can continue this evolution.

The issues you raise to me today will be relatively non-existent a year from now and there will be whole new ones.

In part three, read how text messages really aren’t that expensive, according to Guttman-McCabe.